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Monetary Policy Update: Bank of Ghana increases policy rate to 14.5% in response to elevated inflationary risks

Monetary Policy Update: Bank of Ghana increases policy rate to 14.5% in response to elevated inflationary risks

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The monetary policy committee (MPC) of the Bank of Ghana (BoG) on November 22,2021 decided to increase the policy rate by 100 basis points to 14.5%. The decision at the just ended 103rd MPC meeting is the first monetary policy rate (MPR) increase since November 2015. In the MPC press release, they attributed the decision to increase the MPR to the consistent increase of the headline inflation rate from 7.5% in May 2021 to 11.0% in October 2021. In addition, the committee noted the elevated inflationary risks facing the Ghanaian economy including rising global inflation, high energy prices, uncertainties surrounding food prices and investor behaviour. To put the decision in context, inflation rate for the first 10 months of 2021 has been above the medium-term target band of 8+/- 2% four times; 10.3% in February, 10.3% in March, 10.6% in September and 11.0% in October.

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